Malheur County faces new obstacles to get money for rail center

The proposed site for the Treasure Valley Reload Center north of Nyssa. (The Enterprise/file)

NYSSA – The state won’t provide money for Nyssa’s rail shipping project until there is more certainty the shipping center would work, according to state records.

County officials have been hoping to pry loose $26 million in state money to launch construction of the Treasure Valley Reload Center as soon as this spring. Greg Smith, Malheur County economic development director, had hoped to see onions rolling out of Nyssa by train this fall.

That’s not likely to happen.

The state is doubling down on concerns raised by state consultants, top state officials, and an outside review committee about whether Treasure Valley Reload Center is economically feasible. The Oregon Transportation Commission is asking Malheur County officials to overcome those doubts with new information.

State officials warned Smith by letter last week that the $26 million could be “in jeopardy” if the project doesn’t progress carefully.

The state Transportation Department said it needs evidence that Union Pacific Railroad agrees there’s enough business to justify special service to Nyssa, that Malheur County is negotiating with a private company to actually run the shipping center, and that rail cars needed for shipping onions were available.

Those are significant hurdles that put Malheur County in a bind. The county has to demonstrate how much could be shipped out of Nyssa, but potential shippers aren’t going to commit unless they know their costs will be lower. Union Pacific won’t set its prices, though, until it determines how much volume there would be out of Nyssa.

Grant Kitamura, president of the Malheur County Development Corp., the public company created by the Malheur County Court to manage the Nyssa facility, said Monday that officials are now polling area onion shippers to get a volume estimate for the facility. Kitamura said he met with Union Pacific officials last week and received a verbal commitment for service.

Smith didn’t respond to telephone or email messages on Monday, but instead posted on his county agency’s Facebook page that the state’s questions would be “easily answered.” The post struck an optimistic tone: “Just a few more steps and we will be breaking ground.”

Smith and his team have been working on a rail shipping center for more than two years.

Last month, Smith appeared before the Oregon Transportation Commission to pitch the Nyssa project and secure the state money, but he came away empty-handed. The commission also is considering two other rail projects in the Willamette Valley, including one outside of Albany that Smith has been hired to develop.

A week after that meeting, the county economic development’s Facebook page featured a story that appeared in “Onion News.” The story said the Transportation Department gave a “green light” to the Nyssa project.

But Tammy Baney, Transportation Commission chair, said otherwise in a letter to Smith last Thursday.

“There were too many outstanding questions and too much risk to approve any project,” Baney wrote.

DOCUMENT: Letter to Malheur County

The two-page letter said the state needed more information to “make an informed decision” on the project and indicated that the Transportation Commission “reserves the right to come back with additional requests.”

Smith was given a deadline of this Wednesday, March 20, to provide the commission a timeline for when Malheur County would produce the additional information. The commission was scheduled to meet this Thursday and instead of considering awarding the funding, will get a briefing from Transportation Department officials on next steps for the Nyssa project.

State officials want to know more about Treasure Valley Reload Center’s arrangements with Union Pacific, saying it was “unknown the level of service to be provided.” The state also wanted to see the completed business analysis the railroad is requiring before it commits to serving Nyssa.

The county’s proposal submitted to the state last fall estimated how much of Malheur County’s onion business would use the Nyssa center, and that there was enough volume to make the operation profitable. That report assumed that all onions now being trucked to Wallula, Wash., for shipment would instead go to Nyssa. The report also assumed that the other half of the Nyssa business would come from local packers who decide to ship from Nyssa instead of from railing sidings serving their own plants.

On March 12, Malheur County economic development posted a survey trying to pin down which businesses would use the reload center.

Union Pacific Railroad has asked us to gather information on persons wishing to use the Treasure Valley Reload Center,” the Facebook post said. “The rail company is gathering data on how many cars will be needed, what kind of cars will be needed and frequency trains will depart and arrive at the county’s facility.”

The state is also asking Malheur County for a memo showing that it is in negotiations with a terminal operator to run Treasure Valley Reload Center and “provide a timeline for reaching final agreements, fees and rate structures.”

Reviewers had earlier suggested to the state such an agreement was vital to deciding whether the Nyssa reload center was feasible.

But Smith wrote state officials last month that such an operator would be named within two months of state money being approved.

“Prior to state approval of funding, to name an operator and terms of operation was ‘placing the cart before the horse,’” Smith wrote.

The state also wants Malheur County to pin down information on rail cars.

“Without rail cars for the facility, containers or goods cannot move,” the Transportation Department wrote. The state is asking for a memo detailing what kind of rail cars are needed, who will provide them, and where the rail cars will come from.

DOCUMENT: State requests for information

Baney also delivered one other piece of bad news to Smith last week – Malheur County would get no more state money for rounding up the new the information.

“The decision is not to provide any additional financial resources,” Baney wrote. “ODOT believes that the information being requested in the matrix should be based upon the work you have already completed and been compensated for.”

Smith had said he would seek more state money for planning purposes. His agency has already received $343,000 from the state to pay a string of consultants to prepare Malheur County’s proposal.

In addition, Malheur County pays Smith’s company $9,000 a month to run the county’s economic development department and last summer gave him an additional $6,000 a month for work on the reload center.

On Monday, County Judge Dan Joyce said the county wouldn’t be providing additional money for the rail shipping project.

Baney also appeared to hint that funding for Treasure Valley wasn’t a certainty.

She wrote that “should your project be selected for funding,” an agreement between the state and the county would include “very clear milestones that must be met to unlock additional funding.”

She said it would then be up to Malheur County “to be making documented progress to prevent putting the remaining project funds in jeopardy.”

Les Zaitz: [email protected]. Pat Caldwell: [email protected] or 541-473-3377.

How we reported this story

The Malheur Enterprise obtained key new state records from the Oregon Department of Transportation. Reporters provided detailed written questions to Greg Smith, director of Malheur County Economic Development director and left a telephone message seeking comment. On Monday, the Enterprise provided Smith excerpts from the story to verify their accuracy. As of Tuesday morning, he had not responded.

The written questions were also provided to Grant Kitamura, president of Malheur County Development Corp., and Lynn Findley, the vice president. Kitamura responded in an interview to select questions. Findley initially responded that he was engaged in his duty as state representative and didn’t have time to respond. On Tuesday, he said by email he couldn’t speak for Malheur County or Malheur economic development.


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Nyssa shipping project draws more state concern

Top state official recommends no state money for Nyssa rail project until risks addressed

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